tomorrow's mortgage executive magazine (december 2013 issue)

December 2013

The Place For V is ionaries and Thought Leaders

TOMORROW’S MORTGAGE EXECUTIVETOMORROW’S MORTGAGE EXECUTIVE

LEONARD RYAN, QUESTSOFT

We Also Discuss:Winning Servicing Strategies

New-Age Education TipsGetting Technology To Work

+ Much More

Distributed by PROGRESS in Lending Association & NexLevel Advisors

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On The Cover

47 Tackling ComplianceQuestSoft’s Leonard Ryan details all you need to know about compliance based on his 20-plus years of

mortgage experience.

Inside Track17 Process Improvement

Tony Garritano notes that there are some obvious pitfalls that may be coming to our space in 2014.

21 Future TrendsRoger Gudobba suggests that creative thinking may

be just what’s in order to comply with the CFPB.

25 Business StrategiesMichael Hammond says that there are strategies

that you can use in order to maximize sales in 2014.

Market Vision 05 Editor’s Note

This section discusses how dipping origination volume can be a good thing.

07 Recovery Tips Fidelity Bank details what they see as

clear business opportunities in 2014.

11 Your VoiceDocMagic talks about how the rising

cost of compliance can be mitigated.

December 2013

TOMORROW’S MORTGAGE EXECUTIVE

Leonard Ryan, QuestSoft

CONTENTSFeatures

29 Get EducatedCarrington Mortgage notes that lenders

and servicers need to create a continuous learning environment.

35 Success, & More SuccessConsultant A.R. Smith says that to be

effective, you need to be in the business of making technology work.

41 Train HardPerino and Walzak stress the importance

of continual training as we become a very regulated business.

53 Servicing StrategiesIndiSoft points out that in an ever-

changing market, mortgage servicers shouldn’t remain stuck in old habits.

In The Trenches13 Market Pulse

New data from Alchemy Worx debunks the many myths associated with e-mail marketing.

EXECUTIVE TEAMTony Garritano

Founder and ChairmanRoger Gudobba

Chief Executive OfficerMichael Hammond

Chief Strategy OfficerKelly Purcell

Chief information OfficerGabe Minton

Chief Technology OfficerSteven Horne

Chief Operating OfficerMolly Dowdy

Chief Marketing Officer

Tony GarritanoEditor

Roger GudobbaExecutive Editor

Michael HammondSenior Editor

Janice CordnerCreative DirectorMiguel Romero

Photo Art Director

Contributors:(in alphabetical order)

Tim AndersonSusan JohnsonJeremy PeaseBarbara Perino

A.R. SmithAlysia Vrolyk

Rebecca Walzak

This magazine is distributed by:

CONTENTSDecember 2013

TOMORROW’S MORTGAGE EXECUTIVE

Tomorrow’s Mortgage Executive magazine is a monthly publication distributed online at www.progressinlending.com. The mission of the publication is to provide one place where people who believe technology strategies can solve pressing mortgage problems can express their ideas. The magazine was designed to be a vehicle to create conversations that will move the mortgage industry for-ward. As such, the information found in this publication is all about thought leadership and should not be interpreted as recommenda-tions coming from the publisher. We are here to give our contribu-tors a voice. All materials found in this magazine are not guaran-teed for accuracy and the publisher is not liable for any damages, losses or other detriment that may result from the use of these ideas. © 2012 Tomorrow’s Mortgage Executive. All rights reserved.

Our Lender Board

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My Advice To You

As you should know by now, the he Mortgage Bankers Association (MBA) expects to see $1.2 trillion in mortgage originations during 2014, a 32 percent decline from 2013. While MBA expects purchase originations to increase 9 percent, it expects refinance

originations to fall 57 percent.MBA also upwardly revised its estimate of originations for 2013 to $1.7 trillion from $1.6

trillion to reflect shifts in lender market shares reported in the latest Home Mortgage Disclosure Act (HMDA) data release.

MBA expects that purchase originations will increase to $723 billion in 2014, up from $661 billion in 2013. In contrast, refinances are expected to drop to $463 billion from $1.08 trillion in 2013.

For 2015, MBA is forecasting purchase originations of $796 billion and refinance origina-tions of $433 billion for a total of $1.2 trillion. Jay Brinkmann, MBA’s Chief Economist and Senior Vice President for Research and Education released the following statement highlighting key points of the forecast:

“We are projecting home purchase originations will increase in 2014 due largely to gains in home sales and home prices. We expect to see a decline in the share of sales paid for with cash, and higher average LTVs on purchase mortgages, due to the rise in home prices.

“We expect mortgage rates will increase above 5 percent in 2014 and then increase further to 5.5 percent by the end of 2015. As a result, mortgage refinancing will continue to drop, and borrowers seeking to tap the equity in their homes will be more likely to rely on home equity seconds rather than cash-out refinances. We will potentially see a small increase in refinances toward the end of 2015 as the Home Affordable Refinance Program 2.0 (HARP) expires but HARP activity during 2014 will still be low. While on paper the number of HARP-eligible borrowers appears large, the reality is these borrowers have been unresponsive to numerous attempts to encourage them to participate in the program and are less likely to do so now that rates have gone up.”

So, what is the average lender to do? My advice is: Mr. Lender, you need to get creative. That doesn’t mean come up with creative loan products, it means come up with creative ways to reach borrowers and offer a better mortgage process. The same-old, same-old thinking just won’t cut it. Now is the time to think outside the box and leapfrog over the competition by offer better service and a better experience.

EDITOR’S NOTES

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Recovery Tips

Undoubtedly, 2012 was a very good year for the mortgage banking industry. This trend has continued through the first

half of 2013 with originators feasting on refi-nance volumes as well as experiencing a rebirth in the purchase market. With the recent increase in rates, the volume of refinance transactions has dropped off dramatically. While employees may be enjoying this “breather,” it appears as though this level of activity may be the new normal. At the same time, originators have had to add overhead to their organizations to meet the compliance requirements imparted by the Dodd Frank Act.

Looking ahead to 2014, it will be crucial for owners to look at all aspects of their business. Determining your break-even – how many loans do you need to close in a month in order to cover your overhead, should be at the top of the list. If volumes are falling short of the break-even level, you can either look to increase the revenue earned on each loan or look to reduce expenses or, more likely, a combination of both.

Many originators have obtained GSE ap-proval in order to sell to the agencies directly in hopes of increased earnings and avoiding over-lays from the aggregators. However, this comes with hefty capital and liquidity requirements. In addition, files need to be free of errors, in a sense – perfect, in order to avoid potential

repurchase requirements. Likewise, given the 3 percent points and

fees test in the qualified mortgage (QM) rule, mortgage brokers may be wondering just how they can make money. At first blush, it would seem that a move to a correspondent or mini-correspondent status could create flexibility. However, this comes with additional require-ments from a staffing, systems and capital perspective. While non-QM loans can be gener-ated, it remains to be seen what type of appetite the secondary market will have for these types of loans.

If you are a mortgage banker with warehouse lines, turn your warehouse lines to reduce your direct loan costs. Look to clear suspensions quickly – and try to avoid them in the first place. Look at your investor scorecards to understand what types of suspensions are occurring and how often. Use this information to improve the processing, underwriting, pre-closing and post-closing systems. In addition, review your inves-tor purchase advices to make sure the calcula-tions are accurate and that you are not “leaving dollars on the table.”

It will also be critical for owners to develop a contingency plan for any necessary overhead cuts. This plan needs to look not only at people but processes. During times of high volume, inefficiencies with both people and processes can be hidden. When looking at employee cuts, it is important to remember that the cuts need to make sense. For example, if you cut too deep in your origination staff, you may not have enough “boots on the ground” to take advan-tage of any niches or new markets. Similarly, if you cut too deep in your backroom opera-tions, you may not be able to close the loans that come through your door. It is important to remember that purchase loans are often more difficult and time-consuming to process, under-write and close than refinance loans. And even

2014 OpportunitiesLooking ahead to 2014, it will be crucial for owners to look at all aspects of their business..

By Susan Johnson

Look at your investor scorecards to understand what types of suspensions are occurring and how often. Use this information to improve.


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MERS logo is a registered trademark of MERSCORP, Incorporated in the United States. ACORD logo is a registered trademark of the Association for Cooperative Operations Research and Development. IASA logo is a registered trademark of the Insurance Accounting & Systems Association. Inc. MISMO logo is a registered trademark of MISMO, Inc. Progress in Lending logo is a registered trademark of the Progress in Lending Association. MBA logo is a registered trademark of the Mortgage Bankers Association. ©2013 eSignSystems. All rights reserved. eSignSystems, SmartSAFE are registered trademarks or trademarks of Wave Systems Corp. in the United States and/or other countries. A division of Wave Systems Corp.

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more importantly, the purchase market is much more sensitive to closing dates than the refinance market – lest you have buyers with a loaded moving van sitting outside of your office. Your processors, underwriters and closers need to understand how to work with purchase transactions. They need to be able to perform their jobs efficiently, timely and accurately.

Lastly, take a look at your break even in terms of originations by state. While you may feel you need to be licensed in as many states as possible, multi-state origination complicates your compliance and licensing functions. This includes keeping up with licensing, audits, and insurance requirements with a number of states. This needs to be balanced with the

fact that geographic diversification of originations can be a positive.

It seems as though our industry has been faced with many obstacles and more challenges to come from higher compliance costs, lower margins and now shrinking volume. The answers on how we move forward are not yet clear and will be different for each company and each situation. However, it brings to mind a quote from an unknown source, “The truth is that our finest moments are most likely to occur when we are feeling deeply uncomfort-able, unhappy or unfulfilled. For it is only in such moments, propelled by our discomfort, that we are likely to step out of our ruts and start searching for different ways or truer answers.”

It seems as though our industry has been faced with many obstacles and more challenges to come from higher

compliance costs, lower margins and now shrinking volume.

Susan Johnson is Vice President, Mortgage Warehouse Funding, at Fidelity Bank. She began her banking career with Fidelity Bank in 1989 following graduation from the Carlson School of Management at the University of Minnesota. Susan works with companies in many different industries including construction, wholesaling, and manufacturing. She combines financial alternatives to maximize opportunities for her clients. Susan is also responsible for Fidelity Bank’s mortgage warehousing program, which provides funding to mortgage banking firms.

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Your Voice

New CFPB rules have been a boon to the many compliance providers to the mortgage lending industry. Every time

a new rule comes out, lenders need some way of ensuring that their systems are compliant. Of course, no one wants to shut everything down and re-tool their shop every time something changes. And so compliance shops benefit. Is this good for our industry? Here’s my take:

I don’t have a particular problem with this. As many of you know, I’ve worked for tech-nology and compliance service providers to this industry for a long time. As long as they’re adding real value to the lender or servicer, they’re entitled to benefit. But there seems to be a perception in the industry that data com-pliance can be separated from mortgage docu-ments. Even in an all-electronic world that’s not true.

Should the industry pay more whenever a compliance firm decides to charge extra for running another rule or audit?

If compliance and loan quality are the big-gest industry concerns — as we know they are — then the doc prep guys are directly in the “critical path” to ensure loan data and docu-ment quality and integrity. Right before the lender draws legal docs is the perfect time to do all of the final compliance and tolerance checks; GFE/TIL comparisons are done and that data is embedded, along with a complete audit trail with date and time stamps as elec-tronic evidence of what was verified just sec-onds before the final docs were delivered.

It makes sense because refusing to print the docs until everything is compliant is the first,

best way to ensure that a non-compliant deal doesn’t get done. This is happening today and it’s a beautiful thing. But how should these companies charge for all of that?

In the early days of doc prep, everything the service bureau did for the bank cost them

something extra. It was a different job, for all practical purposes. If you needed a new docu-ment in the package, you paid extra for that. Complex deals cost more because it was harder for your document provider to pull it together. Those days are over.

Today, we have elaborate technologies that allow us to pull together a set of closing docs in a fraction of a second — and then add all of your disclosures to the package for you with the time left in that first second. Our busi-ness rules engines are exhaustive and they’re backed up by compliance attorneys who work on this stuff every day. And then wrap it with a legal compliance rep and warrant on top of that. So why should you pay more to test for compliance with separate systems at different times that don’t even update the docs?

And yet, that’s what we keep seeing: com-panies that provide a partial solution who are charging more every time they add another critical piece to the compliance puzzle. It should come with the docs and at no extra charge.

Why Are We Paying More?If compliance and loan quality are the biggest industry concerns — as we know they are — then the doc prep guys are directly in the “critical path” to ensure loan data and document quality and integrity.

By Tim Anderson

New CFPB rules have been a boon to the many compliance providers to the mortgage lending industry.

During his career, Tim Anderson has been involved in many aspects of the mortgage industry and has acquired more than 30 years of mortgage and technology experience. Most recently, he has been heavily involved on the technology side of the industry, where he played an instrumental role in developing one of the first e-mortgage platforms, including e-signature and e-vaulting technologies. At DocMagic, Tim is the head of the firm’s eServices Division where he spearheads future “e” initiatives at DocMagic.

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Debunking Myths

Many ideas that e-mail marketers hold to be true re-garding e-mail delivery are simply false, according to research and analysis conducted by my e-mail

marketing agency, Alchemy Worx. Here are seven such e-mail myths:MYTH 1. CONSUMERS ARE DROWNING IN E-MAILS FROM TRUSTED BRANDS.

Figures from Alchemy Worx and the Direct Marketing Association’s E-Mail Tracking Report show that around 40% of consumers who receive brand e-mails are getting no more than three per day, on average, and almost two-thirds (63%) receive no more than six. Further, research from Merkle suggests that three-quarters (74%) of consumers prefer to re-ceive commercial communications via e-mail, which means that consumers prefer emails from brands over contact via any other channel

MYTH 2. THERE IS A BEST TIME TO SEND E-MAILS

This myth assumes that consumers simply are waiting for a brand to e-mail them, and that consumers act immediately on every e-mail they receive. Data from Alchemy Worx shows that while 76% of e-mail opens happen in the first two days, four out of five purchases (79%) take place after that two-day period. One-third (32%) of purchases take place more than two weeks after the consumer receives an offer e-mail.MYTH 3. YOU SHOULD STOP SENDING E-MAILS TO INACTIVE USERS AFTER SIX MONTHS

According to figures from Alchemy Worx, 20% of a brand’s annual unique opens are from people who have been inactive


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MARKET PULSEfor the first six months of the year. So, by not sending e-mails to users who are deemed inactive for just a year, brands are potentially missing out on one-fifth of their annual opens.

MYTH 4. CONSUMERS ARE TRIGGER-HAPPY WITH THE SPAM BUTTON

In fact, according to data from Return Path, less than one subscriber in every 2,000 will mark an e-mail as spam.MYTH 5. IF BRANDS SEND MORE E-MAIL, CONSUMERS SIMPLY IGNORE MORE

Though it’s true that increasing send frequency tends to reduce the open and click rates for a given message, Alchemy Worx’s own customer data shows that over a three-month period, if a brand increases the number of e-mails it sends to consumers from one per month to four, doing so more than doubles the number of consumers opening one or more e-mails (from 10% to 24%). That increase in e-mail volume also, on average, results in an additional 11% of revenue for the brand.MYTH 6. SHORT E-MAIL SUBJECT LINES GIVE BETTER RESULTS

Analysis of more than 200 million e-mails by Alchemy Worx highlights that short subject lines (fewer than 60 char-acters) will only help increase open rates. However, if brands want consumers to engage with e-mails—by opening and clicking on the content—then 70 characters or longer will be more successful. The longer the subject line, the more likely consumers are to click on the content within the e-mail.MYTH 7. E-MAILS END UP IN THE SPAM FOLDER BECAUSE OF THE SUBJECT LINES

Alchemy Worx analyzed data from eData Source of more than 200 clients and 540 billion sent e-mails, which shows that keywords often thought to ensure an e-mail will end up in the junk folder actually have little or no effect. Whether an e-mail ends up in a junk folder is more complicated than that, with the main reason being the sender’s reputation. And that is generally based on what information the mail filter or receiving ISP can gather about the sending habits of your IP address, rather than the contents of its subject line.

So, use this info and send great mortgage-related e-mails today to boost your sales.


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Process Improvement

We all know about the massive changes coming next month imposed by the CFPB. These changes impact lenders

and servicers alike. Believe it or not, some lenders and servicers are still not ready. This is going to be a huge industry issue, and potential pitfall, to being successful in 2014.

Surely, the big takeaway for everyone is to be prepared for even more compliance hurdles in 2014, agrees Sanjeev Malaney, CEO of document workflow provider Capsilon. “Lenders have to provide indisputable audit data in order to more clearly see everything about the loan. In addition, that audit trail has to be system generated. So, you can’t change a spreadsheet, essentially, and change the facts after the fact. If you think about it, lend-ers are looking for ways in which they now have something that the auditors can put in their hands, and it’s something that lenders can observe and monitor. They want to have some defense against the compliance officers that do show up.”

Earlier this year, Capsilon enhanced its DocVelocity desktop application to substantially improve performance. Changes include an ad-vanced printer driver, local page caching and page streaming to speed up the way mortgage documents are imaged, stored, downloaded and viewed. The updated printer driver enables users to print documents from their desktop applica-tions with reduced file sizes, making them more

efficient for uploading, downloading and storage. Intelligent page streaming downloads images only as they need to be viewed by the user, providing a visible performance improvement. Additionally, when users download a document from the cloud to their desktop, images are locally cached to in-crease speed when needed again.

“The second big piece for lenders to pay atten-tion to is data integrity,” noted Malaney. “There’s always been a big disconnect between data and documents, so we’re investing very, very heavily in providing solutions that will help close that gap in 2014. That’s the biggest theme of our road map this year.”

In particular, accounting automation vendors like Advantage Systems can really help lenders comply in 2014. “Our clients tell us that they are looking at the reports more closely than they may have 8-10 months ago, so they need that im-mediacy of data,” said Brian Lynch, president of Advantage Systems. “When they can log onto the web, and they can run a P&L, and they can drill down to the transaction that’s giving them some pause, that’s very, very useful to them. They’re not waiting for data. They’re not waiting for someone to close in a month. They could see that real time data was happening in their organization, and that’s been a big, big help to our clients to be able to stay on top of what issues are hitting them.”

In keeping with the move to providing lenders with more real-time access, Advantage Systems launched a mobile app to support its ApprovalSoft workflow and approval management solution, which enables lenders to approve accounting transactions faster and more efficiently. The ApprovalSoft mobile app enables users to take a picture of financial documents, such as receipts, using the camera from a smartphone or tablet and eliminates the time and stress of having to do ex-pense reports.

In addition, it allows companies to speed up the processing of accounting transactions and improve internal controls by making it easier to record and review approvals for each financial

Common PitfallsAs we enter 2014, there are a lot of issues that mortgage lenders need to be aware of.

By Tony Garritano

Compliance aside, market shifts away from refinancing in favor of purchase lending could also be a big pitfall for lenders that can’t transition quick enough.


The information provided here is for dissemination to and for the use of real estate and financial business entities only and is not an advertisement for the extension of credit to consumers.

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collaborationPicture a Web-based “paperless office” that serves as an end-to-end document management tool for brokers and correspondents– actually reducing costs, saving time, increasing efficiencies, and reducing bottlenecks in the loan process.

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transaction. The technology maintains a history of approved transactions for audit purposes and ensures that only approved transactions are entered into the accounting system.

“Our ApprovalSoft application further streamlines lenders’ internal approval processes and saves valu-able time that can be dedicated towards the origina-tion of new loans,” concluded Lynch.

Compliance aside, market shifts away from refi-nancing in favor of purchase lending could also be a big pitfall for lenders that can’t transition quick enough. Technology vendors like Mortgage Returns, however see this as an opportunity for lenders if they make the leap seamlessly to purchase lending. “A lot

of the clients that we deal with are moving towards more of a centralized and controlled marketing en-vironment, not really giving up on the creativity, but just making sure that the pieces are controlled a lot tighter,” explained Jim Blatt, CEO of Mortgage Returns. “We see a lot of people moving towards this strategy. They’ve been on that road for a little while, but there’s certainly an increasing in the pace of adoption these days.”

To this end, Mortgage Returns has enhanced its technology and services to enable mortgage origina-tors to maximize their ROI by marketing more ef-fectively to their customers, prospects and referral partners.

Enhancements enable mortgage originators to do the following:

• Automatically upload new customers and prospects from the LOS directly into Mortgage Returns;

• Order direct mail straight from Mortgage Returns’ new Storefront marketing solution;

• Reach Spanish-speaking customers with

one-to-one direct mail and email marketing;• Create company, branch and loan officer web-

sites; and• Gather valuable feedback on the mortgage

company and its loan officers through a post-close email survey for borrowers and realtors.

These features are in addition to Mortgage Returns’ Business Analysis Report, which was re-leased earlier in the year and provides originators with detailed data on production statistics, market-ing ROI, customer retention and loan officer perfor-mance that can be used to increase the impact of their marketing efforts.

“The new enhancements enable lenders to im-prove the effectiveness of their marketing programs and increase marketing ROI by capitalizing on their relationships with customers, prospects and referral partners,” pointed out Blatt. “We see the projections from the MBA that refis will be down 61% over the next 12 months,” pointed out Blatt. “Over the course of 2014 with purchases up some 10-15% or more, that’s really been the focus. Lenders need to ask: How do you get more purchase business, whether it’s from your past customers, converting more pros-pects or referral partners? A real focus on trying to change the mindset of their originators to be much more focused on the purchase market and making sure that their marketing is consistent with that is through automation.”

Regardless of your new technology footprint, you should never forget your people. As lenders and servicers alike look to automate more in 2014 to address these and other potential pitfalls, Tucker McDermott, EVP of Fay Servicing advises industry participants to “leverage the strengths of their peo-ple. We at our company have always counted on a first and foremost focus on the talent and really mak-ing sure that the technology we provide our people really leverages their skills. We still think the mort-gage business really is a people business, not only internally but externally as well. You’ve got to know, really, that the people you’re bringing on board know your customer and borrower, and again, you’ve got to know your servicer. You’ve got to be very, very involved with every piece of the equation. Provide your people the right kind of training that is going to allow them to succeed in this environment. It’s a new world that we’re in, and there’s a lot of ways to leverage technology to make sure these people are trained in the right ways to exist and succeed in this new world we’re in.

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Lenders need to ask: How do you get more purchase business, whether it’s from your past customers, converting more prospects or referral partners?

Tony Garritano is Chairman and Founder of PROGRESS in Lending. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker. He can be reached via e-mail at [email protected].


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Future Trends

The end of the year is always a good time to step back and reflect. Think to your-self: What were your goals at the begin-

ning of the year? What were your organization’s challenges? Were you able to meet and resolve those challenges? Were there new challenges that surfaced during the year? How did you respond to those challenges? Typically, at year-end, we grade ourselves in a number of areas to assess our overall outcome and set our goals for the coming year.

What is your biggest challenge ahead for this year? The upcoming regulatory changes are probably at the top of the list. Most of us view that as the biggest problem facing the lenders

and technology vendors going forward. In fact, the new guidance out of the CFPB does seem onerous. The agency supervision and examina-tion manual was updated in order to incorporate: • new examination procedures released since

the issuance of the manual in October 2011 (covering mortgage origination; short-term, small-dollar lending; SAFE Act; and con-sumer reporting);

• the June 21, 2012, Interagency Guidance on Mortgage Servicing Practices Concerning Military Homeowners with Permanent Change of Station Orders; and

• technical corrections and formatting changes. In doing this, the agency laid

out seven modules by which they will test your mortgage

origination business. Module 1 is Company Business Model; Module 2 is Advertising and Marketing; Module 3 is Loan Disclosures and Terms; Module 4 is Underwriting, Appraisals, and Originator Compensation; Module 5 is Closing; Module 6 is Fair Lending; and Module 7 is Privacy.

The objectives of the origination examina-tions include:

1. To assess the quality of a supervised en-tity’s compliance management systems in its mortgage origination business.

2. To identify acts or practices that mate-rially increase the risk of violations of federal consumer financial law, and as-sociated harm to consumers, in connec-tion with mortgage origination.

3. To gather facts that help determine whether a supervised entity engages in acts or practices that are likely to violate federal consumer financial law in con-nection with mortgage origination.

4. To determine, in accordance with CFPB internal consultation requirements, whether a violation of a federal con-sumer financial law has occurred and whether further supervisory or enforce-ment actions are appropriate.

And don’t think for a second that the CFPB is just interested in mortgage origination, ser-vicing is important to them, as well. Servicing

oversight is broken down into three sectors that all have modules of their own that the CFPB will be looking at. For routine servicing, Module 1 is Servicing Transfers, Loan Ownership Transfers, and Escrow Disclosures; Module 2 is Payment Processing and Account Maintenance; Module 3 is Customer Inquiries and Complaints;

Problem Solving and Decision Making Finding solutions with creative and critical thinking in a post CFPB mortgage lending world.

By Roger Gudobba

“We cannot solve our problems with the same level of thinking that created them,” said Albert Einstein.


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Module 4 is Maintenance of Escrow Accounts and Insurance Products; Module 5 is Credit Reporting; Module 6 is Information Sharing and Privacy Default Servicing; Module 7 is Collections and Accounts in Bankruptcy; Module is 8 Loss Mitigation; and Module 9 is Foreclosures.

The objectives of the servicing examinations include:

1. To assess the quality of the regulated entity’s compliance risk management systems, includ-ing internal controls and policies and proce-dures, for preventing violations of federal con-sumer financial law in its mortgage servicing business.

2. To identify acts or practices that materially increase the risk of violations of federal con-sumer financial law in connection with mort-gage servicing.

3. To gather facts that help determine whether a regulated entity engages in acts or practices that are likely to violate federal consumer financial law in connection with mortgage servicing.

4. To determine, in consultation with Headquarters, whether a violation of a fed-eral consumer financial law has occurred and whether further supervisory or enforcement actions are appropriate.

A lot of people in the mortgage industry today view the working of the CFPB as a major problem. However, let’s put that into perspective and re-ally look at what the word “problem” really means. Problem is defined by Merriam-Webster’s as: A diffi-culty in understanding or accepting; something that is difficult to deal with; an intricate unsettled question; a feeling of not liking or wanting to do something; a source of perplexity, distress, or vexation. The op-posite of a problem would be a correct solution. The goal here is to determine the solution to coping with the regulatory changes. That certainly sums up the general atmosphere in the mortgage industry.

Dodd-Frank and the CFPB present many challeng-es across the whole mortgage process. It impacts the

Lender’s product line, requires changes to the loan process, potentially introducing some unexpected consequences. It necessitates significant changes to the Quality Control process. It will influence not only the current environment but the future developments as well.

How and where do you begin to address these new requirements? The first step is to examine your prob-lem solving and decision making processes. Let’s start by reviewing a typical plan.

Problem definition: This is often an area where organizations struggle. Defining and identifying the problem forces you to think about what you are ac-tually trying to solve. Determine who, what, where, or when are impacted by this problem. This is not a one person task, but rather something for the whole organization to engage in since it probably will have a bearing on a number of areas. It is important that everyone has the same understanding and you have a consensus going forward.

Potential solutions: Malcolm Forbes once said, “It’s so much easier to suggest solutions when you don’t know too much about the problem.” As a result, it may be easier to break the problem down into sub-tasks. It is important to think about all the alternatives. List the pros and cons for each. Evaluate the solutions by reviewing the consequences. At this point, do not pre-judge any potential solutions.

Select the best: Now that you have a potential so-lution or solutions; you must have a set of criteria for selection. How realistic is this solution or solutions? Select the best. You now need to define how you will implement that plan.

Next steps: Execute the plan. Monitor the prog-ress. Reflect while it’s fresh.

Basic problem solving and decision making skills are needed every day in the workplace. These situa-tions can range from the simple to the complex. In the case of the CFPB, there may be a natural tendency to wait for the final specifications. However, in my view, that is very short-sighted. Why do I say that? First, those specifications will always be changing as both sides work towards the best resolution. You don’t want to be left holding the bag and scrambling to comply, do you? Second, it will have a long-term benefit if you start prototyping a solution. Why? Thinking long-term and prototyping now will enable you to gain a deeper understanding of the overall impact to your organization. Too often we hope for the easy fix. I hate to be the bearer of bad news, but there is no easy fix, so you better get started on your compliance strategy today.

Roger Gudobba has over 25 years of mortgage experience. He is CEO at PROGRESS in Lending and Chief Strategy Officer at technology vendor Compliance Systems. Roger is an advocate of data standardization and a more data-driven approach to mortgage. Roger can be reached via e-mail at [email protected]

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“If I had an hour to solve a problem I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions,” said Albert Einstein.


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There’s been a lot of doom and gloom talk these days. On the one hand, the Mortgage Bankers Association (MBA) expects to see

$1.2 trillion in mortgage originations during 2014, a 32 percent decline from 2013. While MBA ex-pects purchase originations to increase 9 percent, it expects refinance originations to fall 57 percent. Specifically, MBA expects that purchase origi-nations will increase to $723 billion in 2014, up from $661 billion in 2013. In contrast, refinances are expected to drop to $463 billion from $1.08 trillion in 2013.

Further, new rules and regulations are expected to drive up the cost to originate, making it more expensive for lenders to originate fewer loans. Credit analyst Jack Kahan with S&P noted, the new rules will increase expenses, extend fore-closure timelines and prompt servicers to select the foreclosure option over loan modifications and deeds-in-lieu of foreclosure in future circum-stances. S&P, which looked deeply into how the January launch of the rules will impact mortgage finance, warned that more borrowers are going to have a hard time accessing mortgage credit. And when they do, it will take longer and cost more in some cases.

I know, it all sounds bad, but I’m here to tell you that it doesn’t have to be. In a white paper entitled “Success Guide For Maximizing Sales in 2014” put out by RAIN Group, there are some great tips that I think are worth sharing. In putting together the white paper, the company studied over 700 major purchases from the perspective of business-to-business buyers to find out what re-ally happened in their buying experiences. These buyers represented $3.1 billion in purchases. The research suggests that in order to maximize your sales in 2014 you have to:1. Educate Prospects With New Ideas and

Perspectives. According to a white paper en-titled “What Sales Winners Do Differently” research, the number one factor separating sales winners from second-place finishers is

this: Sellers educated buyers with new ideas or perspectives. In other words, the seller became known as a source of insight. For too long loan officers were order takers. They didn’t have to be trusted advisors because the business was coming to them in droves regardless. That has changed. And the same goes for mortgage tech-nology vendors that rely on the latest buzzword to sell their applications. That won’t work any-

more either. 2. Collaborate With Prospects. Buyers want

to be part of the solution. Work with them to develop solutions that achieve mutual goals. When you engage buyers, the idea is to invite them to be an active participant in a process, not someone who listens to a pitch and then decides “up or down” on buying what you’re selling. Sellers who win the most sales collaborate with buyers almost three times as often as the sell-ers who come in second place. In almost every sales situation, collaboration helps. Leads aren’t going to come to you in 2014. You have to work harder. A new way to collaborate is through so-cial media. Use Twitter, LinkedIn and Facebook to reach out and stay connected.

3. Persuade Prospects-They Will Achieve Results. Paint a clear, persuasive, and believ-able picture of the results an investment will yield for your buyers. Simply put, your ability to quantify the impact and paint a clear, persua-sive, and believable picture of the results you can achieve for buyers is the foundation for how important it is for the decision maker to

Business StrategiesMake The Most of 2014You’ve heard about all the bad things coming your way in 2014, so I want to tell you a bit about how you can turn all that negativity into a positive.

By Michael Hammond

The number one factor separating sales winners from second-place finishers is this: Sellers educated buyers with new ideas or perspectives.


You Are the Key to Our Sucess!

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buy from you. If you don’t show the impact, the initiative will fall to the bottom of the priority list. Remember when I said a minute ago that vendors can’t rely on buzzwords to sell software anymore, well here’s what I mean. In every selling situation in 2014, no matter if you are a lender or a vendor, you have to tell the prospect what’s in it for them. You have to have a clear return on investment story to tell that will improve that prospect’s situa-tion or they are just not going to listen to you.

4. Listen To Prospects. Actively listen to buyers by asking engaging questions and following up with documents that demonstrate your understanding. It is about the “value” you provide, and educat-ing the prospect with new ideas and perspectives. It is about collaborating. You shouldn’t be in a situation where you are lecturing and talking too much. At first, buyers want to know whether you are a good fit for working with them and they want to evaluate your level of technical competence.

Remember, “No one cares how much you know until they know how much you care.” Remember the mortgage meltdown? Borrowers ended up in loans that they were not tailor made for. Why? Because the borrower ignored the terms, but also because the lender or broker didn’t listen to the borrower’s situation to steer them into the right loan. You have to listen to your prospect and un-derstand their pain points before you can sell them anything.

5. Understand Prospect’s Needs. Don’t focus on needs diagnosis. Instead, make sure buyers

know you “get” their goals, pains, and desires. Sometimes all you need is to ask one question and your prospect will share with you all the informa-tion you need to help them. Other times you may need to ask a few, but make sure you don’t overdo it. You don’t want to make your prospect feel as if he is on the witness stand. After you listen to your prospect, you have to get them and meet them where they are. If you want to be a trusted partner, helping your customers solve their most difficult problems and create lasting success, you have to solve the right problems. For example, you may be selling an end-to-end loan origination system but after listening to the prospect you find that lender really only needs the workflow piece. What do you do? You talk about how you can improve their workflow instead of trying to sell them on the benefits of end-to-end automation.

For those of you reading this that aren’t new to the industry, you must realize that sales has changed more in recent years than it has in the preceding 30. In this column I just scratched the surface of what you need to do to maximize sales and become a top performer in 2014.

I really hope that this is exactly what you need to get you well on your way. In simpler terms, think about it this way: If you’re a sales leader, you want your entire team to:1. Educate buyers with new ideas and perspectives.2. Collaborate with buyers.3. Persuade buyers you will achieve results.

Buyers that had a good selling experience, accord-ing to RAIN Group’s research said that the sales-person educated me with new ideas or perspectives; helped me avoid potential pitfalls; collaborated with me; crafted a compelling solution; persuaded me we would achieve results; depicted the purchasing process accurately; listened to me; connected with me personally; understood my needs; and the over-all value to the company was superior. That’s what prospects want.

So, if you want to exceed your sales goals in 2014, it’s time to move beyond the selling strategies of the past and master insight selling, collaboration, and more. But don’t worry, it’s all possible.

Michael Hammond is chief strategy officer at PROGRESS in Lending Association and the founder and president of NexLevel Advisors. NexLevel provides solutions in business development, strategic selling, marketing, public relations and social media. He can be reached at [email protected].

Busin

ess S

trat

egie

s If you want to exceed your sales goals in 2014, it’s time to move beyond the selling strategies of the past and

master insight selling, collaboration, and more.


It is becoming increasingly apparent that mortgage lenders and servicers need to create a continuous learning and development environment for both new and existing associates.

Learning — like mortgages — comes in many shapes and sizes: classroom instruction, on-the-job training, one-on-one tutoring, mentoring and eLearning. The question is: Which is best for your organization?

For some lenders, the answer may be a blended learning solution, incorporating a variety of learning approaches. Regardless of whether the learning is delivered in a traditional classroom setting or electronically online, the instruction must be rigorous, measurable and flexible.

Given today’s ever-increasing regulatory environment and the heightened scrutiny of the mortgage services industry by the Consumer Financial Protection Bureau (CFPB), it is becoming increasingly apparent that mortgage lenders and servicers need to create a continuous learning and development environment for both new and existing associates to meet industry compliance requirements and to surpass market best practices.CREATING A LEARNING CULTURE

Providing training and continuing education to your associates is one thing, but instilling a culture of learning in your organization is quite another. At Carrington, we didn’t want to simply comply with new federal rules and regulations; we wanted to create a culture of continuous learning that stretches beyond the classroom and into people’s daily work lives. We wanted to make learning fun and also improve operating leverage for our business. Mortgage lenders and servicers need to build a culture of learning in their organizations that reaches from the top down – from the CEO to the newest associate.

In order to implement a dynamic eLearning culture for compliance and business training solutions, one that reaches thousands of associates nationwide across a variety of business lines, Carrington’s Learning and Development team utilize a Learning Management System (LMS), which is named the Carrington Education Portal. Within the Education Portal, associates have 24/7 access to a vast storehouse of training resources, including recorded webinars, instructor-led training (ILT) sessions, job aids, quick reference guides, continuing education courses and Q&A documents.

Starting with compliance content, the architects of Carrington’s Education Portal wanted to drive users to the new portal for mandatory training modules. Next, we pursued targeted marketing internally to all the business units to promote and spread the new eLearning environment company-wide, ensuring bottom-up buy-in into the new eLearning platform.

LEARNING

NEVER ENDSBy Alysia Vrolyk


It is becoming increasingly apparent that mortgage lenders and servicers need to create a continuous learning and development environment for both new and existing associates.

Learning — like mortgages — comes in many shapes and sizes: classroom instruction, on-the-job training, one-on-one tutoring, mentoring and eLearning. The question is: Which is best for your organization?

For some lenders, the answer may be a blended learning solution, incorporating a variety of learning approaches. Regardless of whether the learning is delivered in a traditional classroom setting or electronically online, the instruction must be rigorous, measurable and flexible.

Given today’s ever-increasing regulatory environment and the heightened scrutiny of the mortgage services industry by the Consumer Financial Protection Bureau (CFPB), it is becoming increasingly apparent that mortgage lenders and servicers need to create a continuous learning and development environment for both new and existing associates to meet industry compliance requirements and to surpass market best practices.CREATING A LEARNING CULTURE

Providing training and continuing education to your associates is one thing, but instilling a culture of learning in your organization is quite another. At Carrington, we didn’t want to simply comply with new federal rules and regulations; we wanted to create a culture of continuous learning that stretches beyond the classroom and into people’s daily work lives. We wanted to make learning fun and also improve operating leverage for our business. Mortgage lenders and servicers need to build a culture of learning in their organizations that reaches from the top down – from the CEO to the newest associate.

In order to implement a dynamic eLearning culture for compliance and business training solutions, one that reaches thousands of associates nationwide across a variety of business lines, Carrington’s Learning and Development team utilize a Learning Management System (LMS), which is named the Carrington Education Portal. Within the Education Portal, associates have 24/7 access to a vast storehouse of training resources, including recorded webinars, instructor-led training (ILT) sessions, job aids, quick reference guides, continuing education courses and Q&A documents.

Starting with compliance content, the architects of Carrington’s Education Portal wanted to drive users to the new portal for mandatory training modules. Next, we pursued targeted marketing internally to all the business units to promote and spread the new eLearning environment company-wide, ensuring bottom-up buy-in into the new eLearning platform.

LEARNING

NEVER ENDSBy Alysia Vrolyk

Tomorrow’s Mortgage Executive 30

Our mortgage unit, Carrington Mortgage Services, LLC is active in more than 40 states. Since each jurisdiction has its own local laws, regulations and ways to license mortgage professionals, we needed to construct a state-of-the art educational platform that spread the learning across various business units for licensing, continuing education, compliance and annual performance reviews. With over 1,800 associates spread across the nation, Carrington decided to build a robust, virtual online learning system that would build interest and capture associate attention in an effective, consistent, engaging and cost-effective manner.

In any profession you can do the bare minimum to enter a field and maintain your license, but we wanted to raise the bar. We believe training offers a competitive advantage because our loan officers, underwriters and other mortgage professionals can be more productive and provide more loan options to borrowers. Home buyers do better working with highly trained loan professionals who have access to top-notch training. Better training means loan officers, underwriters and others in the lending process can be more productive and helpful to their clients.

To support Carrington’s rapid growth, the company developed a self-paced program to help associates get up to speed quickly in a consistent and measurable manner. Prior to moving on to additional training, for example, associates must complete knowledge assessment with a minimum pass rate of 80 percent.FLEXIBILITY AND CHOICE

Three key components to the success of the Carrington Education Portal are flexibility, accessibility and options. Self-paced eLearning modules allow our associates to have a choice of classroom learning options and scheduling flexibility. The Carrington Education Portal provides “just-in-time” learning 24 hours a day. When our associates need information it is easily accessible from anywhere there is Internet access. Flexibility is vital because it allows associates to mix work, personal time and educational requirements in a way

that best meets their busy schedules and interests.THE GOOGLE GENERATION

Increasingly, a growing number of our mortgage professionals are Generation Y — or Millennials, the Google Generation, or young professionals born between 1980 and the 1990s.

These young people are exceptionally tech savvy and enjoy learning on laptop computers, smart phones and tablets. Today, Generation Y — those in their 20s to mid-30s who are obsessed with technology and social media — seem to learn differently, chatting, posting, tweeting and consulting “their community” on important decisions constantly. Moreover, social-media services like Facebook, Tumblr, Twitter, YouTube and Pinterest are an integral part of how Gen Y communicates and learns.

As this younger generation becomes a bigger part of the workforce, the wired way we live now in the digital age requires firms to pivot with the changing technological times and speak to them where they communicate. Our personal and professional lives, once separated, are now integrated. Indeed, from infancy to retirement, technology now touches the most intimate portions of our lives, rewiring human relations and the learning process that our personal connections support.

We’ve discovered how they communicate, learn and share, and that how they make decisions are different from the previous generations. Individuals in this age group tend to regard computer learning as natural and normal, something as common as email and Twitter. Additionally, many of our

associates are members of Generation C, where “C” represents a connected society based on interest and behavior.

Therefore, to engage Gen Y and C requires moving resources to new digital platforms like eLearning. As a result, budgets are moving from traditional classroom instructor-led training to

new digital and cloud-based initiatives. To engage our Google Generation, and build a world-class eLearning team in the mortgage industry, Carrington has hired a team of renowned educators, including a Ph.D. in organizational psychology, a learning management systems administrator, and an internal eLearning designer for the Carrington Education Portal.

So which side of the learning investment curve do you want to be on? The side where budgets are shrinking or the side where demand and budgets are growing? DRIVING ENGAGEMENT

Building a successful eLearning program also requires creativity and ingenuity to get buy-in into the new learning environment. Consider your high performers and offer rewards to pump up associate morale. Successfully integrating our workforce through mobile computing, social media and the internet can unlock the power of associate engagement. These efforts have furthered our organization’s mission, vision and values, which include: Purpose, Empowerment, Opportunity, Passion, Leadership and Excellence. To encourage buy-in, we use emails, surveys and performance prizes to maximize system activity. We actually have “L&D Gurus” on hand to answer questions and provide high-

Providing training and continuing education to your associates is one thing, but instilling a culture of learning in your organization is quite another.


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touch service, and improve the user experience. The L&D Team’s motto is, “We live it to give it.” We practice what we preach and all L&D associates are continually taking courses and learning themselves. It is imperative

to be a “student” to be able to connect with learners and provide enthusiastic support about our programs and courses.

Utilizing a blended learning approach and an open access library provides our associates with opportunities to learn from anywhere. The combination of formal, informal and social learning provides a holistic approach to prepare our associates to be the best in the industry.MEASURING RESULTS

Measuring results is crucial to success in eLearning. At Carrington, we create training that includes certification programs that test comprehension and track progress. Training and certification programs should include quizzes throughout the training process to help associates identify gaps in knowledge during training.

In a year, Carrington’s eLearning initiative has blossomed. Carrington professionals have completed over 12,000 compliance classes in the company’s newly launched Educational Portal. Nearly 90 percent of associates

completed an eLearning course. The cost savings of eLearning over instructor-led training (ILT) is measurable too. For every dollar invested in Carrington’s online eLearning program, the company saved $2.25 in class room training instruction. Indeed, eLearning is a long-term investment; an investment in the future educational growth of our associates and our company.

Not only has Carrington’s Educational Portal seen significant internal return on investment, but the enterprise learning community has noticed our cloud-based eLearning programs too. In September 2013, Elearning Magazine named Carrington Holding Company a Learning! 100 Awards recipient, recognizing Carrington as one of 60 corporations and 40 public sector organizations

worldwide for outstanding learning culture, innovation and collaboration that drives performance. Earlier this year, Carrington received the renowned 2013 SkillSoft Innovation Award for its effective eLearning initiatives. And in June 2012, Carrington’s Educational Portal was honored with its first SkillSoft Innovation Award.ELEARNING AS A RECRUIT-MENT AND RETENTION TOOL

Electronic learning in the mortgage space is here to stay. For Carrington, eLearning is also an important recruitment and retention tool for our human resource department because it allows us to track the educational activities of loan officers and use such data for compliance and annual performance reviews. Indeed, workplace learning and development is quickly becoming big business in America. U.S. businesses spent $170 billion on associate training and development, according to the latest data from the American Society of Training and Development (ASTD), the world’s largest training and development trade group.

Technology is changing the way people communicate and will revolutionize education and training in the 21st century. Technology allows flexibility, speed and interaction, and supports virtual learning, all key to driving home a culture of learning. With better training, we can work to reduce investor risk and help borrowers get the financing they want while giving our associates the drive and confidence they need to find their own way to success.

More than ever before we are living our lives virtually. At Carrington, our eLearning program is considered an investment, not a cost. Our online learning is constantly changing and

improving. We have successfully married technology with high-quality learning and development to create an effective training environment not only for our company and customers, but for our most valuable assets — our associates.

We believe training offers a competitive advantage because our loan officers, underwriters and other mortgage professionals can be more productive and provide more loan options to borrowers.

About the AuthorAlysia Vrolyk is vice president of Learning and Development at Carrington Mortgage Holding LLC. Carrington Holding Company, LLC owns and operates multiple businesses that cover virtually every aspect of single family residential real estate transactions – investments in U.S. real estate and mortgage markets, loan origination and servicing, asset management and property preservation, real estate sales and rental, and title and escrow services. Alysia is a national expert in learning and development training, compliance and eLearning, and is recognized as an industry leader in mortgage learning and development innovation.


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By A.R. Smith

Today’s Recipe For SUCCESSToday’s mortgage executive knows that to be effective, you need to be in the business of making technology work.

If you are working in the mortgage industry, then you are in the business of helping people. Mortgage originators are empathetic commu-nicators, focused on service and sharing in the

dreams of the homebuyers they are assisting.If you are an operations manager, you know that

providing great customer service only scratches the surface of a successful mortgage business. In fact, running a profitable operation takes a lot more than good service, it takes the right infrastructure and technology. Today’s mortgage executive knows that to be effective, you need to be in the business of making technology work.

Mortgage COOs and CIOs and their accompa-nying operations and technology departments are typically responsible for the systems and platforms that make the funding process go smoothly. Respon-sibilities usually also involve meeting compliance requirements, gathering and disseminating informa-tion for new business, and providing detailed data to in-house financial personnel, stakeholders and regulators. In short, they are in the business of pro-viding and overseeing the infrastructure that allows employees to deliver on their promises to customers.


I am a strong believer in both tenets of the mortgage business. There’s no doubt that the mortgage industry is all about helping people, but I can also as-sure you that you can’t succeed without

the right technology and infrastructure.My experience in residential finance

goes back to 1988, when I was CIO of a bank. I was responsible for the organization’s operations and technol-ogy systems. I carried that first experi-ence with me throughout my banking career, as I continued to play key roles in establishing and managing other financial institutions. The seeds of my latest endeavor, TVMA, Inc. (Ter-aVerde Management Advisors), can be traced back to 2006, when I was COO of a nationally chartered bank, which I co-founded. In that role I had account-ability for operations, technology and servicing for its mortgage banking division.

At that time, the bank was originat-ing $1.5 billion annually in mortgage loans and looking for ways to be more productive and efficient. I challenged my team to find new ways to streamline the workflow and put loans through the system more quickly and efficiently. It soon became apparent that if they wanted to reach the next level in pro-duction, the organization would need to move away from the self-hosted mortgage platform that it purchased when the bank was established.

In analyzing the in-house databases, the team realized that one impediment to productivity was the intensive num-ber of people “touches” that each file experienced. We needed a more effi-cient workflow, a platform that would allow visibility of the loan customer from end-to-end.

The company needed to make a radical transformation of its internal database and so the team embarked on

a due diligence process to discover an end-to-end solution. My goal was to have an integrated workflow that would streamline processes in conjunction with making desired platform changes.

At that time, finding a platform for a mid-sized mortgage originator was not an easy task.

As the search progressed, the team was introduced to Encompass360, a new product offered by Ellie Mae. Encompass360 was an end-to-end solution for operations and the costs were appropriate for our organization. It was a platform that intuitively solved issues for which we had done multiple customizations to accomplish our goals in operations.

Once the decision to go with En-compass360 had been made, my team and I searched for a consultant that un-derstood the new platform, mortgage banking, and project management. Our search was unproductive. We knew the project would be a radical undertak-ing for our team, so we searched for a consultant who could be our partner in integration, training and customization.

Due to the unique nature of our oper-ation, we soon realized that we would have to put a team together in-house to customize and launch the initiative. The in-house team developed the “vi-sion” of the platform requirements and the project was kicked off in the summer of 2006. The bank success-fully converted to the new platform in December of that year.

Within 2 years, the bank’s mortgage operations had more than doubled its production and the technology team morphed from department employees and supervisors to an internal team of business analysts and system managers.

Benefits of the enhanced workflow and third-party integrations included an increase in loan officer recruiting and

performance, higher morale in overall operations, and a seamless approach to accessing customer information for sales and operations. The new ease of access to information, reductions in

turn time and greater “one touch” ac-curacy, led to enhanced profitability and resulted in higher sales and perfor-mance from the entire team.

In 2010, the bank’s parent company was sold, with most of the key technol-ogy team being released. Motivated by my enthusiasm for mortgage op-erations and accompanied by an out-standing technology team, I founded a consulting company that could deliver the expertise that we had sought back in 2006. I knew we had something really special – a team that not only understood the technology aspects of mortgage loan operation platforms, but also knew first-hand how to develop and deliver project management and

business advisory solutions that would make users even more successful.

In the fall of 2011, we launched TVMA with its first client, Potomac Mortgage Group. Ed Dean, CEO, of Potomac Mortgage Group, (now

If you are an operations manager, you know that providing great customer service only scratches the surface of a successful mortgage business.


known as MVB Mortgage), based in Fairfax, VA, was seeking manage-ment insights to enhance workflow processes, compliance and efficiencies as it implemented its loan origination systems platform.

Now with over 75 clients in 20 states, TVMA, approaches each client with a desire to listen and learn. I like to say that we “get into our clients’ hearts and minds.” Sometimes we serve as more of a translator, listening to what our clients want and then “translating it” into a plan of action that involves tech-nology and operations. Many times, a

client can’t quite verbalize what they need, so we ask the questions to de-fine their situation, and then come up

with a business solution to solve their dilemma or make them more efficient.

In addition to working with loan origination systems providers, we assist with other third party vendors, includ-ing appraisal, compliance, warehouse and data mining companies. There is a plethora of information involved in the mortgage origination process. It is exciting to be able to help clients marry

data from multiple sources and give them the real-time reports and analyt-ics to run a more efficient, effective op-eration. It’s pretty thrilling to deliver a service or apply a “plug-in” for a client that provides the same answers with a “click,” that previously took several people days and multiple spreadsheets to gather and assimilate.

Over the last couple of years, I’ve spoken to many mortgage executives who are in the same boat that I was in seven or eight years ago. I encourage anyone looking to hire a consultant for mortgage operations to do so after

conducting research on the company or person, talking to references and having frank discussions about what is

expected throughout the process. Some helpful tips I have shared include: • Establish your goals or define your

problem before your start the search process. Find candidates who have the specific industry and platform experience that you need.

• The consultant should always ask questions prior to performing the work. If the prospective consultant

is not asking you the right questions and probing for information, you may not have found the ideal con-sultant.

• Check references and be sure that you are dealing with a consultant who is highly recommended in the mortgage industry. Make sure your consultant can deliver based on what he or she has accomplished with other clients. The right con-sultant should be invested in your success and be motivated by your challenges and accomplishments. Consultants who have ongoing cli-

ent relationships are typically ones that know how to create value and become more like a partner than an outside advisor.

• Don’t make a decision based on fees or costs only. Determine what you are getting for your investment. Be wary of fixed rate projects that are not well defined in a project plan or with specific outcomes. Ask for a Statement of Work or Functional Specs that provides details and de-liverable timeframes.

• Determine how accessible your consultant will be to you and to your organization. Define expectations for onsite and remote work. Estab-lish a standard for ongoing contact and communication.

• After you have hired your consul-tant, insist upon billing statements that are descriptive and detailed. Finally, I encourage anyone look-

ing for a consultant in the mortgage business to choose one who embraces mortgage banking. Don’t settle for a generalist – our industry is changing too quickly and the requirements are too great. Find someone who will in-vest the time to live in your world.

About the AuthorA.R. Smith co founded TeraVerde Management Advisors/TVMA, Inc., which is a company that provides consulting, training and implementation of mortgage loan technology platform for best practices in the mortgage banking industry to banks and independent mortgage bankers. Previously, Smith was co-founder and EVP of American Home Bank from 2001-2005 and named President and COO of American Home Bank N.A. in 2005 and remained in that position until 2010.

There’s no doubt that the mortgage industry is all about helping people, but I can also assure you that you can’t succeed without the right technology and infrastructure.


MortgageFlex Systems became a market leader by listening to our clients. You told us what you wanted andwe delivered.

We’ve been listening for over 30 years now and the result is LoanQuest, a loan origination system that is aculmination of best practices and modern technology. One that is flexible, secure and compliant. One thatlets you do what you do best – lend, while we take care of the technology.

Providing successful solutions takes more than just delivering a system in a new architecture. It takes experience,knowledge, creativity, and commitment to be a long-term technology partner.

No one knows what the future will bring, but one thing is certain – MortgageFlex will be there with the solutionsyou need. Call today to experience the MortgageFlex difference.

800.326.3539www.mortgageflex.comjacksonville, florida

Origination and Servicing Systems

Transforming Mortgage Lending

We de l i ve r

MFX Mort Lstn_Deliv_Magn 6_6_Layout 1 6/12/13 3:46 PM Page 3

“On the mountains of truth you can never climb in vain: either you will reach a point higher up today, or you will be training your powers so that you will be able to climb higher tomorrow,” says Friedrich Nietzsche.

Singing Off The Same Song Sheet?

BY BARBARA PERINO AND REBECCA WALZAK

Every year during the holiday season, companies typically bring their staff together to celebrate, enjoy a potluck,

exchange gifts and maybe sing lots of holiday songs. The holiday hilar-ity often revels that the group can sing a fantastic four-part harmony, which adds to the cohesiveness of the staff. As part of this celebration there is typically a review of the past 12 months and an overview of the coming year. This year the holiday season is overshadowed by the post-

holiday date of January 10th. There is little doubt that every individual involved in mortgage lending knows that all those new regulations we have discussed, analyzed, made decisions on, implemented programs for, and gave training on is about to finally become reality. In some ways it will be a relief, rather like walking out of the dentist’s office, after knowing for a month that you had to have that root canal. However, despite all the effort, the documentation and the implementation, it is important to realize that without preparing the staff, the efforts may fail to meet the test of performance. Training is the key to making all the other efforts work.


Training is more than just telling people about the new regulations. It is an important part of bringing the organization together in a time of significant change and uncertainty. In addition to learning about the new fee calculations, the new disclosures and the new underwriting parameters, it is important that the staff are made a part of the changes. Many times we simply tell them what to do or what changes were made to the system. But to make the changes more meaningful and bet-ter accepted, one last awareness and training program may be just what is needed.

So what should you train in this last session? One of the most important items to be covered are the regulations themselves. Although you may have had sessions on the requirements, the regulations have been changing fairly frequently so it is important that ev-eryone has the latest information. If you haven’t done any training yet, it is not too late to start. There are nu-merous online programs that provide an overview of the regulations and what they mean to individuals and programs. Diehl and Associates is one such provider with friendly ava-tars that lead your staff through each of the regulations and allows you to demonstrate to regulators that training has been done. You might also want to check with Cross Check Compliance to assist you in your efforts.

Another area of training that should be given as close to January 10th as possible is what your investors and/or aggregators are expecting. Just because training on the regulations gives a ba-sic understanding of the requirements themselves, different lenders and inves-tors may have different interpretations or are processing them in a slightly different manner. Loan officers, pro-cessors and underwriters especially need to be aware of and thoroughly understand what each investor expects. One of the most critical areas of the QM/non QM debate is that you must make sure that methods for calculating income and debts are consistent with investor expectations, and because these differences may be somewhat confusing, a refresher session will help

resolve a lot of the confusion. Another idea for last-minute train-

ing may be a session on acronyms. We all know how the regulators cannot implement anything without attaching an acronym to it. Helping all the origination and servicing staff understand the differences between QM, QRM and ATR; as well as ECOA and HMDA might be the difference between selling loans as anticipated or having to discount them if they can be sold at all. And don’t forget the old favorites; RESPA and TILA (or is it TIL?). There are changes within these regulations as well. Falling into the belief that “everyone knows these regulations” could turn out to be a mistake that costs a lot more than a few extra training sessions. Of par-ticular importance are the fees and points to be included into the QM 3% calculation of costs. Keep in mind that even at the convention in October, the

CFPB staff were providing conflicting information. If there is any confusion, you might want to reach out to the MBA staff who were supposed to be getting the final decision on what was to be included.

One other area that does not appear to be garnering a great deal of attention is the area of customer complaints. Since this is really the heart and soul of what we are dealing with today it is probably a very wise idea to spend some time discussing the protocol for handling these issues. There should be at least a basic script for handling various types of calls, an escalation

process available and a way to docu-ment the issues, whether written or verbal, and finally a way to document how they were resolved. While many systems, both origination and servic-ing, do not have standard data fields to record this information, the regulators will expect to see reports that provide this detailed information.

While this type of training is impor-tant, there are also other non-specific regulatory training that can prove to be critical in achieving a robust and successful implementation of all these new regulations. This is a comprehen-sive session with the entire staff to make them aware of how the organiza-tion is dealing with these regulations. While senior executives are involved in the decision-making process and are critical to the overall implementa-tion program, we may forget that the staff is worried too. Many times we are so focused on the individual spe-

cific issues and making sure loan offi-cers, processers, and underwriters un-derstand what they are to do and how to do it, we forget that these people are concerned about the bigger things as well. For example, they may be con-cerned that these changes may mean that their job will be eliminated or that they will be moved into a differ-ent position. They may be concerned about what these changes mean for the viability of the company or what hap-pens if the regulators come in the door on January 11th. These issues should and can be addressed in “training” sessions that involve everyone.

Training is more than just telling people about the new regulations. It is an important part of bringing the organization together in a time of significant change and uncertainty.


So how do you make that happen? Many years ago, these sessions had to be done face to face. While cum-bersome, costly and exhausting for

the executives involved, it resulted in bringing staff from all over the orga-nization together in an understanding of what was happening and how they were impacted. They learned how their piece of the process fit into the entire puzzle and why its accurate ex-ecution was paramount to the success of the organization. With the use of webinars, Skype and Google, train-ing can also now be done remotely, which saves on costs, cuts down on the need to travel to corporate and is efficient and effective.

One of the most common examples of a need for training of everyone in-cludes the closing function. Because our focus is typically on “how can we get this loan approved?” we tend to relax our vigilance as it heads to closing. But what if the closer wasn’t informed of the new loan officer compensation policy and limitations? Could they instruct the closing agent incorrectly in the fees they collect or give inaccurate information for dis-bursement? And what about the post-closing processor? Are there new documents that they must ensure are in the file? What if neither they nor the closing agent is aware of new dis-closure timing requirements? Could you end up with an unsalable loan? Another item that should be included in the conversation is exactly who is your regulator. While we continu-ously talk about the CFPB and their

requirements, they are not everyone’s regulator. Explaining to the staff how the regulators work, who will be your examiner and what the exam process

involves will make it much easier to prepare them for an exam when it happens. Remember, everyone in the loan origination and servicing cycle

is involved in these changes, so take no process for granted.

And speaking of everyone, has anyone given a thought to the real estate agents? Even though they escaped rather unscathed from the mortgage debacle, they are the ap-plicants’ first source of information on these new lender requirements.

Can they explain to them the issues surrounding QM and non QM loans and what it means when determin-ing which house to buy or how much money they need for a down payment and closing costs? Do they under-stand the new GFE and TIL so that they can give the correct informa-tion? Do they understand how your organization is going to be imple-menting the regulations and have you identified for them how it will impact their working relationship? A session in the real estate agents’ offices could go a long way to making the process flow smoother from the start and keep them identifying your company as their main source of loans.

So, as we head into the holiday parties, filling up with candy, cookies and food and relaxing after the hard year’s work, we have to make sure that the same harmony we enjoy with our songs, doesn’t become a jarring

noise to the regulators. We have all spent this year practicing these new songs that are intended to smooth the savage beast of the regulators, but without a comprehensive training plan for the staff, the harmony we ex-pect can become a discordant refrain. After all, every chorus can always practice one more time.

About the AuthorBarbara Perino is Director of Business Development for Direct Valuation Solutions a new cloud based technology platform that is designed to streamline and enhance the appraisal fulfillment experience. Barbara has 23 years of extensive sales and sales management experience along with operational knowledge from all facets within the residential property valuation industry. She is also a professional certified coach.

About the AuthorrjbWalzak Consulting, Inc. was founded and is led by Rebecca Walzak, a leader in operational risk management programs in all areas of the consumer lending industry. In addition to consulting experience in mortgage banking, student lending and other types of consumer lending, she has hands on practical experience in these organizations as well as having held numerous positions from top to bottom of the consumer lending industry over the past 25 years.

With the use of webinars, Skype and Google, training can also now be done remotely, which saves on costs, cuts down on the need to travel to corporate, and is efficient and effective, as well.


(734) 432-0212 www.mycvf.org

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Executive Interview

TACKLINGComplianceQUESTSOFT’S LEONARD RYAN DETAILS ALL YOU NEED TO KNOW ABOUT COMPLIANCE BASED ON HIS 20-PLUS YEARS OF MORTGAGE EXPERIENCE.

Crunch time is here. A slew of new rules are going into effect next month. As a result, we decided to profile a compliance expert this month. Leonard Ryan has been head of QuestSoft, a leading compliance vendor,

and active in the mortgage space for some time now. As a com-pany, QuestSoft has over 20 years of experience in the design of software exclusively for the mortgage industry. The company has provided compliance-quality geocoding services for over 10 years. It touts 8 years of direct origination, funding and mort-gage banking experience, and 16 years of direct compliance risk management assistance to institutions large and small. The company’s mission is to provide technically superior products at reasonable costs to customers. QuestSoft achieves this by automating everything possible in its products and operations, as well as working with interface partners — other software de-velopers — to make their applications more efficient. Leonard talked to us about his career and how lenders can keep up with the new compliance rigors.


Q: Explain how you first got in the mortgage industry.

LEONARD RYAN: I started working for a mortgage company as a loan officer when interest rates were at 10%-14% trending down to 9.95%. I eventually became VP of the company. As far as my tech background with mortgages, when PC’s became popular, I looked for software for our mortgage com-pany. After installing our new soft-ware on a Friday, I had an eight-page letter detailing many deficiencies the following Monday. About a month later I was asked if I would be that company’s product manager. The pro-grammer and I redesigned the product in four months with a lot of very late nights and weekends. I then helped sell the product and grow the LOS platform from 50 to 970 customers in the four years that I was with them.

Q: How has the industry changed over the years?

LEONARD RYAN: Mortgages and com-puters both went through a full circle of evolution from centralized, distrib-uted and back again now to the cloud. In mortgages, you had strong central underwriting, then distributed, then no real underwriting, and now we have returned to a centralized model due to compliance, reporting and analytic concerns.

Q: This year QuestSoft coined the term all-in-one or end-to-end compliance. What does that mean exactly?

LEONARD RYAN: I have always had strong concerns about the inefficien-cies of the mortgage market. There are so many vendors and points of data, which creates constant inaccu-racies and data integrity issues. So, almost a decade ago I set out to create a platform that would concentrate on compliance and data integrity issues. The result is our Compliance EAGLE product where today you order 14 ma-jor services, do a prefunding check on tens of thousands of pages of regula-tions, check government websites for exclusionary and NMLS verifications,

get flood, fraud, fee verification, all in the same thirty seconds, all with the same password and all with the same set of data. Add a few seconds and the 4506-T transcript can be cross refer-enced vs. the borrower disclosed in-come. This way if a data issue arises, it is quickly corrected and then instantly re-checked to see if there were any other compliance issues created. It’s easy to see how valuable a service like this can be to help prevent expensive fines from being levied by regulators for data quality issues.

Q: QuestSoft has entered into several strategic partnerships this year. De-scribe your relationship with CIC and the other e-signing vendors? How is that going?

LEONARD RYAN: There are a number of excellent e-sign vendors on the mar-ket, but most are 100% cloud-based. We wanted that capability, but we didn’t want to have a situation where when the third party was down, our services would be down. CIC offered a solution that allowed us to have a tighter integration with the technol-ogy, more flexibility and more control of the security environment on our servers. The e-signatures and vendor association is interesting because so much of it is controlled by document vendors due to initial disclosures. It

just seems logical from a consistency standpoint to use the signing technol-ogy that the borrower becomes famil-iar with for everything. So that is why we also embarked on approving as many legitimate providers as we could that met BOTH the IRS and SSA audit requirements.

Q: QuestSoft has also aligned more closely with various LOS solutions such as Calyx Software. What’s the significance of that partnership and are more similar alliances coming?

LEONARD RYAN: QuestSoft has 19 years of experience with the manage-ment team at Calyx and in the past year with so many new regulations, Calyx recognized that we were each independently duplicating a lot of functionality. Because of our con-centration in the compliance sector and more overall features, Calyx felt it would benefit their customers to provide our upgraded features as their standard offering. They also get our support team that works directly with regulators and examiners on compli-ance issues every day.

Thus far it looks as if it will pay off for everyone. Calyx is receiving a substantial boost to their reporting compliance while freeing up some programming resources. Customers have features that help them submit


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their data much faster with far more validation checks. And QuestSoft builds our client base.

Regarding additional partnerships, I don’t have an ego when it comes to our name on a product as long as it brings clear benefits to the end user. That said, I’m sure we will have many more partnerships. but probably not private label-focused. There are only three or four companies out there with the client base to justify the private label investment.

Q: Earlier this year QuestSoft launched the Compliance RELIEF application. Ex-plain the industry significance of that tool and its reception so far?

LEONARD RYAN: Compliance RELIEF is designed to be able to expand the number of reporting regulations we can service and also to accommodate larger institutions than we have served in the past. Compliance reporting has been complicated over the past five years by the CFPB, federal regulators, states and even investors requiring more than just traditional HMDA data. The problems arise with a lack of commonality in fields and enumerations.

With our HMDA RELIEF product, we found ourselves appending features to accommodate these formats. How-ever, with Compliance RELIEF, each regulation is its own module and has its own data entry areas and set of data validation checks. The modules can be activated individually depending on the requirements of the lender. Compli-ance RELIEF also is being designed to accommodate 5 million records and multiple subsidiaries at a time so it will be able to serve very large financial institutions in addition to our current client base.

The reception for Compliance RE-LIEF was very positive at our recent compliance conference. We showed off a series of new time saving features we have now added due to the data-base enhancements. Additionally, the product has integrated mapping and more analytics, both of which were well received. We have about 40 new implementations contractually in the queue after the first of the year with

expectations that we should have 250-300 institutions added or upgraded to the platform by the end of next year.

Q: QuestSoft does an annual survey where you ask about LOS market share. What do you expect to see in next year’s survey? Any LOS trends that you think my readers should be aware of?

LEONARD RYAN: The past three years have seen substantial increases in the number of lenders seeking new Loan Origination Systems. This increase went from around 12% several years ago to almost 18% last year. I would not expect the percentage to be so high this year and would guess it might fall back to the 10-12% range.

I believe the same Dodd-Frank rules that accelerated the desire to switch to updated platforms will also begin to re-strict the desire to change systems un-

less there are compliance issues. Once compliance concerns are properly ad-dressed by LOS vendors, I think it will be very difficult for lenders to want to take chances with their operations. By mid-2014, after we see the systems that have survived the January 10 regula-tions, you might see market share num-bers begin to become more locked in.

Q: QuestSoft also surveys lenders about their top compliance concerns. What can you tell us about what we might see in that survey next year?

LEONARD RYAN: Obviously, the Janu-ary 10 changes including ATR/QM will probably still be a very high concern on March 1 when we conduct the survey. RESPA/GFE has re-emerged, HMDA changes might be announced and there are still only about 60% of regulations in Dodd-Frank that have been finalized. So we feel that there will be plenty to consider. At the same time, I think state regulations and NMLS concerns are diminishing, but time will tell.

Q: Lastly, is the new compliance burden hindering or furthering industry inno-vation?

LEONARD RYAN: There is little doubt that the current compliance burden is hindering innovation. While it has been a benefit to my company finan-cially, we are constantly on the phone working with LOS and document companies about compliance issues. In addition, most new product updates from LOS vendors concentrate about three-quarters of their features on com-pliance upgrades, leaving room only for bug fixes, not new innovation.

Industry PredictionsLeonard Ryan thinks:

1.There will be fewer lenders (maybe 6,500

down from the current 7,200).

2. There will be more emphasis on compliance.

3. It’ll be a difficult real estate lending market

in the first half of the year as lenders adapt to the nuances of the January 10 regulations and the more restrictive investor overlays in place until then.

InsIder ProfIleLeonard Ryan is founder and president Laguna Hills, Calif.-based QuestSoft Corp., a top provider of mortgage compliance software and services for lenders for the last 17 years. Ryan oversees day-to-day operations for the company including, but not limited to, business and software development, strategic partnerships, sales and pricing. Prior to founding QuestSoft, he was senior vice president of MixStar, Inc., where he helped design and launch a Lender/Broker communication network in partnership with America Online.


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Strategies That WorkNEW IDEAS CONSTANTLY CHANGE THE LANDSCAPE OF ANY SPORTS TEAM’S GAME PLAN. WHY SHOULD MORTGAGE SERVICING BE ANY DIFFERENT?

BY JEREMY PEASE

Companies are consumed with knowing what strategies are working for their competitors and how to replicate that success, hence the use of such phrases as “best practices” and “lessons learned.” Along those lines, many servicers want to know what loss mitigation techniques are working for other servicers and how can my model be reworked to tap into that success.


Let’s look at our favorite sports teams and their approach to imple-menting best practices. New ideas constantly change the landscape of a team’s game plan. For example, in professional football, whichever team wins the Super Bowl each year is the team to emulate. There is validity to this approach, however; there are flaws as well. Simply stated, what works for one company will not always work for other companies. Organizations as well as teams are made up of varying individuals who are motivated to ex-cel in multiple ways. The best execu-tives and the best coaches learn to take the talent they have and use the proper strategy to create exceptional success in their line of business. For example, Zappos strives to provide the absolute best customer service, and its entire company lives that as a lifestyle every day at work. However, when asked how another company could adapt its model, management simply stated, “do not attempt to do business the way we do, you will fail.” Within the servicing industry, each company has to determine its own loss mitigation methods that work best.

Now, does that mean there are not strategies that have been proven to work in multiple company formats? Absolutely not! Overlying strategies, which if approached from a high-level viewpoint and then tailored to your team’s skills and capabilities can be-come very successful models for your

business. There are so many different facets to loss mitigation and a one-method fits all approach is realisti-cally not going to work.

With any approach, one of the key factors to a successful loss mitiga-tion campaign is successful borrower outreach. If a company cannot reach a borrower, it can only follow regula-tions regarding when borrowers can

be contacted, how they can be con-tacted and the timeline around how to determine afinal resolution. Almost all companies now incorporate a dialer, have a plan in placefor mailings and use a system to track what necessary steps they can take based on the state and even county of the property. How-ever, this lacks a personal approach and has grown complicated when considering regulations such as the single-point of contact (SPOC) rule.

The goal of most servicers is to sim-ply get in touch with the borrower or make right-party contact. This allows the company to let borrowers know about the many options available to-day to help them in their current situa-tion, whatever that may be, and to ini-tiate the process of trying to keep the borrower in their home. Unlike five plus years ago when there were very few programs to assist a borrower at risk of losing their home, today there are an abundance of options that can help most borrowers hold onto their homes or at least exit gracefully.

So the question becomes: How do servicers’ best reach these borrow-ers or make right-party contact? To answer that, look at a strategy that has worked for other companies and brought enormous savings, a method I like to refer to as a personalized SPOC method. Before it was mandated, I know of one servicer that put a per-

sonalized SPOC system in place to create a personal contact and improve the contact rates provided from many dialers. Agents dialed the numbers, had a set of cases assigned to them and gave the borrowers a direct number to call them back on. Ironically, since this transpired before SPOC regula-tions, the fact that one person was assigned to a set of cases as the sole

person to interact with their borrow-ers was actually SPOC even before its time with even higher standards than what SPOC truly requires.

This method of manually dialing and having specific case volumes as-signed to agents seems to contradict what we all think of when it comes to creating greater efficiency and productivity. However, when one servicer put this method into practice for one of their clients, by using this model with intense skip tracing and other methods to track down seriously delinquent borrowers, right-party contacts improved by more than 25 percent in a matter of weeks. Now, imagine an average loss of $25,000 on a home that goes to foreclosure or ends in a short sale. With that in mind, if you have 10,000 loans in loss mitigation and you are able to contact 25 percent more of those borrowers using SPOC thatwould be2,500 more contacts. Take it one step further; if 25 percent of those borrowers qualify for a program that returns them to a regularly paying borrower that would give you 625 borrowers allowed to remain in their homes. The final take-away is that the company could save $15,625,000 in potential losses with a personalized SPOC approach on those properties alone. That is staggering.

Now, the updated question should be: is this a viable and sustainable

Simply stated, what works for one company will not always work for other companies.


model for everyone? Maybe not, but with regulations tightening and bor-rowers becoming more and more tech-

nologically savvy, it is not as outland-ish as it sounds.

When adopting this model it is wise to start small. Begin with 20 to 30 percent of the overall loss mitigation loan volume. This allows servicers to do a comparison between today’s op-erations versus what could change in a matter of months to see if it is truly providing the value for their organiza-tion, and then scale from there. To do

this comparison, make sure the model is setup in a way that you can clearly differentiate the models results through

specialized reporting. This allows you to validate the results and make the case for it or against it. There is soft-ware available that supports this type of model so consider using something like that to keep the two separate paths as differentiated as possible.

Again, will this work for your orga-nization based on the way you perform loss mitigation? It is possible, but if you want a strategy that may be con-

sidered outside the box, but has proven effective in another organization, it is a method worth considering.

Here is another sports comparison: When teams played football in the 1980s and even into the 1990s, most of them ran the ball in power formations with tight ends built to mostly block. Today, many teams spread the field out with four or five wide receivers and air the ball out most of the time with extraordinary tight ends that have size, speed and agility to create mismatches in coverage. Again, someone had to be the first to come up with this drastic change to the offensive approach and some teams, to this day, still hold on to the old smash mouth football game.

At the end of the day every industry changes and evolves with the technol-ogy, talent and intelligence to remain competitive. The test is to determine if your company will be next in line to blaze a trail for this strategy or will it pass you by due to a lack of willingness to adapt. The choice is yours.

About the AuthorJeremy Pease is the EVP of infrastructure at IndiSoft. He is responsible for the organization’s Infrastructure and client relationships. His team works supports growth across the organization through scalable infrastructure solutions for custom applications, while providing clients with best in class client support. He previously worked at Wingspan as the director of PMO and servicing control in the default servicing space and he managed the development of custom applications and analytical reporting for marketing at Neiman Marcus.

Within the servicing industry, each company has to determine its own loss mitigation methods that work best.

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